Small Changes in the Put/call Ratio Are Considered Unimportant,whereas Extreme

question 45

Multiple Choice

Small changes in the put/call ratio are considered unimportant,whereas extreme changes convey information.Two rules of thumb are that a ratio greater than _________ based on a 10-day moving average would be excessively bearish and thus a buy signal,and a ratio of less than _____________ would be excessively bullish,and therefore a sell signal.

• A)0.70,0.65
• B)0.80,0.45
• C)0.90,0.25
• D)0.95,0.05

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Definitions:

Interest Rate

The amount charged by lenders to borrowers for the use of assets, expressed as a percentage of the principal.

Coupon Bond

A bond that entitles the holder to receive periodic interest payments (coupons) and the principal back at maturity.

Effective Yield

Effective yield is the total yield on an investment, taking into account the effects of compounding interest or reinvestment over a given period.

Maturity Date

The date on which a financial obligation must be repaid in full.